HONG KONG, Nov 30 (Reuters) - Onshore China shares ended a
grim November on a bright note on Friday and Hong Kong neared
its 2012 highs after local media reported Chinese Vice Premier
Li Keqiang said urbanisation will drive most of the country's
development in the next decade.

Chinese property, railway and other infrastructure-related
sectors led gains on the day ahead of data due over the weekend
which is expected to show that China's factory activity expanded
at its fastest pace in seven months in November.

On Friday, the Hang Seng Index ended up 0.5 percent
at 22,030.4, just shy of 22,149.7, the intra-day high for the
year set on Nov. 2. The China Enterprises Index of the
top Chinese listings in Hong Kong jumped 1.3 percent.

The Hong Kong indexes rose 1.8 and 0.4 percent in November,
respectively, outshining their onshore peers for a
sixth-straight month.

The CSI300 rose 1.1 percent on the day to 2,139.7,
while the Shanghai Composite Index climbed 0.9 percent
to 1,980.1, after slumping to its lowest closing level in almost
four years on Thursday.

The indexes slid 5.1 and 4.3 percent, respectively, for the
month.

"The biggest issue is how to entice domestic investors back
into the A-share market again, especially since domestic fund
managers are not sure if the market has bottomed," said Edward
Huang, chief strategist at Haitong International Securities.

"Fund managers are beginning to think about switching out of
sectors that have outperformed this year but investors shouldn't
expect too much on policy reforms from China's annual central
economic meeting in mid-December," Huang added.

Data from EPFR Global, a firm that tracks global fund flows
and asset allocation, showed China equities had an eleventh week
of net inflows last week, amid the largest equity inflows
globally last week in two years, according to a Bank of
America-Merril Lynch analysis.

Chinese property developers were the stand out outperformers
in both the mainland and in Hong Kong on Friday.

China Resources Land closed up 3.5 percent to
HK$20.70 after briefly testing HK$21.15, failing at breaching
above chart resistance seen at HK$20.85, its previous high
recorded on Oct 21, 2009. It is now up 67 percent in 2012.

Chinese railway and cement counters also saw big gains on
the day. China Railway Group soared 5.6
percent in Hong Kong and 5.2 percent in Shanghai.

China National Building Material rose 3.5 percent
to a three-week high in Hong Kong. It is now up around 15
percent for the year.

Bucking broader market strength, China Rongsheng Heavy
Industries slumped 9.3 percent in huge volume as
passive investors sold shares at the close after MSCI removed
the stock from its China indexes.

Hong Kong Exchange (HKEx) slipped 0.8 percent
after it raised $1 billion to fund its takeover of the London
Metal Exchange, but it closed above the HK$118 per share the new
share issue was priced at.

A-H DIVERGENCE HITS NEW BOTTOM

The Hang Seng Index has surged around 20 percent so far this
year and the China Enterprises Index has risen 7 percent, while
the CSI300 has shed around 9 percent.

As a result of the divergence between A and H shares
performance, the Hang Seng Index A/H premium index on
Friday hit its lowest close since June last year.

It has closed below 100 on all but two sessions since
mid-October, suggesting the premium that onshore shares once
traded over their offshore peers has been wiped out.

A big part of November's weakness in onshore markets stemmed
from the alcohol sector.

A contamination scare last week involving Jiugui Liquor
worsened losses on the month for the group, after
repeated anti-corruption calls by China's top leaders in the
lead up to the 18th Communist Party Congress earlier this month
put pressure on a sector that had been outperforming.

Jiugui Liquor inched up 0.2 pct on Friday, snapping a
five-day losing streak that had knocked a third off its market
cap since it resumed trading last Friday, after a four-day
suspension following press reports alleging its products
contained excessive toxic materials.

Sector heavyweight Wuliangye lost 0.9 percent on
Friday, hurt by a local news report that its retail prices in
China's southern Guangzhou city have fallen by 15 percent in the
last six months. It ended November down 20 percent, its worst
monthly performance in more than four years.

Kweichow Moutai was up 28 percent on the year at
the end of October, but fell 12.7 percent in November - its
worst month in more than 2-1/2-years. That trimmed its annual
gain to just under 12 percent.

In a further sign of the fragility of the A-share market,
which is set for a third-straight annual loss, the brokerage
sector had a mixed showing on Friday despite attempts by
regulators to calm fears of possible cuts in commission fees.

The China Securities Journal on Friday quoted an
unidentified regulatory official as saying that no team had been
set up to study fee reductions.

Several lockup expiries, along with a congested IPO pipeline
that is worsening an oversupply problem in the A-share market,
could condemn the A-share market to further weakness.
(Editing by Kim Coghill)